President. – The next item is the debate on the report Paul Tang, on behalf of the Committee on Economic and Monetary Affairs, on the proposal for a regulation of the European Parliament and of the Council on disclosures relating to sustainable investments and sustainability risks and amending Directive (EU) 2016/2341 (COM(2018)0354 – C8-0208/2018 – 2018/179(COD) (A8-0363/2018).

Paul Tang, Rapporteur. – Mr President, climate activist Greta Thunberg was in the European Parliament this week and said: ‘let’s save the save the planet like we are saving Notre-Dame’, and she’s right. We have to step up to the big challenge of our time and come into action. We have to do it step by step, stone by stone, and this report, this regulation is an important building block to make the financial sector work, not just for profits but for people and planet, to make finance part of the solution of sustainability challenges and not part of the problem.

From the start, the idea has been radically simple: make sustainability part of the DNA of the financial sector. Let considerations of sustainability apply as broadly as possible to all financial products, to all financial institutions, for all sorts of impacts, and as always with radical ideas, it sounds simple but the implementation is not. But I still dare to say that the negotiation results still broadly reflects this idea.

Indeed, sustainable finance should not be stuck in the green corner, as a manifestation of goodwill while, at the same time, as an excuse for the bulk of non-sustainable investment. In fact, not in a green corner, but sustainability should be discussed in the boardrooms of banks, insurers, pension funds and asset managers. This means that sustainability considerations should be integrated in every step of the decision-making – in every step. This means everyone in the financial sector has to move.

So yes, this is what we need. We need a broad scope, an unlevel playing field, so that consumers who want to know what their product is, can learn to know that, and even more important, we need a broad scope so as not to punish the front runners and to benefit the slackers. We need a broad definition of sustainability. This is a broad concept encompassing a wide array of considerations, ranging from biodiversity to human rights, from emissions to working conditions, and we need a broad framework to manage risks and impact – not only the identification of impacts but also actions to prevent and mitigate them; not just disclosure but also due diligence. I think this report makes progress on all three fronts, and that is a big win. This resonates already with the mind-shift we see in part of the financial sector. A broad range of FSAs is already applying due diligence and, just this week, many of them subscribed to a call for mandatory due diligence. This enables them to show their social value but also to achieve a higher-risk adjusted return. Economics and values can go hand in hand.

I would like to call on the European Commission and the supervisor to use the openings in this regulation to work on standards for disclosures, to better define the social impacts of investments, to work on standards for due diligence: these are what we need to truly make the transition towards sustainable finance. The message from the regulation on disclosure and on the critical benchmarks should be clear to the financial sector: finance will become sustainable. Don’t wait for it but start working on it.

Finally, I would like to thank the representatives of Parliament, the Commission and the Council for overcoming and bridging the significant differences we had in a short time. It has been a tremendous effort by all, and I would like to thank them from the depth of my heart. I deeply appreciate it.

Federica Mogherini,Vice-President of the Commission / High Representative of the Union for Foreign Affairs and Security Policy. – Mr President, the Commission brought forward this proposal in March last year. This disclosure regulation is a key element of the Commission Action Plan on sustainable finance and it is an important capital markets union initiative to achieve climate neutrality by 2015.

It is also a very important step towards the overall objective that you just mentioned of connecting finance with the needs of a more sustainable economy. Our consultations showed that there is not enough transparency on how financial market participants integrate in their policies the negative impact of climate change and its related risks on the value of the investments, for example in assets located in flood—prone areas.

This can lead to distortions in the investment decision process and savings allocation. In Europe, we’re facing a yearly investment gap of EUR 180 billion to reach our climate and energy goals. This goes up to EUR 270 billion if we include water and resource management. The Commission has proposed to devote a quarter of the EU’s budget to climate-related action as of 2021, but public spending is not enough. The private sector has a key role to play in reorienting capital flows towards sustainable investments and reversing the negative effects of climate change.

The negotiations broadly kept the Commission’s approach and added disclosure obligations on adverse sustainability impacts. The reason is that investment decisions and financial advice might contribute to negative material effects on environment and society, regardless of whether the investment strategy pursues a sustainable objective or not. For example, investments in assets that pollute water or devastate biodiversity. We support this extension, which represents an important improvement of the proposal as it would achieve more transparency and better information to end users on all types of financial products concerning sustainability aspects.

This agreement will increase the level and quality of information available on sustainability issues. It will also promote market discipline, discouraging greenwashing. We believe that it will bring behavioural changes in the financial markets to support the transition to a more sustainable economy.

How? First, financial entities will be incentivised to better manage sustainability risks. Second, better information on the sustainability of financial products and in financial advice will encourage a shift in retail investors’ behaviour. Finally, the disclosure on the negative externalities on environment and society will gradually contribute to price in these externalities.

The Commission thanks the co-legislators for having taken up discussions quickly and for having achieved an agreement, and I want to congratulate in particular the rapporteur, Mr Tang, for steering this debate towards a very successful conclusion. This is not the last step as the Commission is working with the co-legislators on the remaining part of the May package proposal on climate taxonomy and on the implementation of the other actions part of the Sustainable Financial Action Plan.

Sirpa Pietikäinen, on behalf of the PPE Group. – Mr President, the financial markets are multi—fold compared to the real economy, so it really matters where those financial flows are directed. At this point we have about 30 trillion invested in unsustainable strained assets that are coal-dependent or otherwise climate- or environmentally-risky. But it is good news that we can guide that investment towards those challenges where we very well know what we have in investing for sustainability on combating climate change. We have more than enough money.

The question and the crux of it is the information. That’s why I regard this regulation about these clauses as the mother of all sustainable finance regulations. It is the question how you disclose not only environmentally-friendly actions but the whole impact of your activities in the environment. So it is the negative, it is the positive, it’s everything in between, and it is not only climate but it is all the others, like biodiversity, for example, indirect land use, water consumption and so on, to avoid this kind of palm oil investment crisis.

We have managed to turn the wheel in this direction now, and thank you for my colleagues and negotiation team for all this. And the next step is to broaden the scope, so that it touches the investing companies so that the investors do get the proper information, and that it touches all sizes and types of companies and all levels of the production chain, so we can talk about environmental accounting and that the information needs to be used on decisions on investments.

Matt Carthy, on behalf of the GUE/NGL Group. – Mr President, it's a real pity, I have to say, that I’m not in a position to support this file. Despite the best efforts of the progressives within this Parliament, including the rapporteur (who I commend), the right-wing groups and the Council have limited the scope of this file so much that the disclosure requirement will now apply to only a tiny proportion of financial products – banks once again are let off the hook.

The Parliament’s report was far superior to what’s been forced upon us now by Member States who are determined to avoid taking any action at all against climate change, it seems. Disclosure isn’t a big risk; it’s the bare minimum we can demand from the finance sector that is doing so much to damage our economy and our environment.

So let me repeat once again: the scientific consensus is that we have until 2030 to act to make rapid and far-reaching transitions in all areas of our economies if we’re to limit global warming to 1.5 degrees. That’s just 11 years away. And just as we’ve seen in other votes on the sustainable finance package, conservatives who really, it has to be said, appear not to give a single damn about the future of our planet, are sabotaging the future of our children and their children.

This could be my last speech, but I want to say that I hope the next mandate of this Parliament will be used to reconnect with the people across Europe, and there’s going to be big changes and big choices to be made in the next mandate. We have to decide whether we’re going to actually pursue real climate action or whether we’re going to just burden families with carbon taxes and pretend that we’re taking real measures. We have to decide whether we’re going to support families or whether we’re going to continue to give a free rein to the vultures and the banks. We’re going to have to decide whether we invest EU monies in creating real sustainable jobs and growth across the EU or whether we’re going to actually invest EUR 13 billion in the creation of a European army.

I hope I’m back here fighting for Ireland and I hope that I’m here to work with all of you, so that we can create a better and a fairer European Union.

Molly Scott Cato, on behalf of the Verts/ALE Group. – Mr President, Matt is very welcome to join. It was a joy to hear the global climate hero, Greta Thunberg, speak here on Tuesday. She was electrifying. But she also condemned the hypocrisy of politicians who express concern about the climate while voting against action. Although it has been a political battle to make the progress we have, I hope she would be pleased by the EU’s agenda on sustainable finance, one of the most important tools to ensure the promise of systemic change to halt climate breakdown.

I’m proud that, once again, the EU leads the world on environmental standards; this time by agreeing the world’s first mandatory disclosure regime for a major financial market. Citizens should expect the same transparency when buying financial products as when we buy food. When people found horsemeat in their lasagne, it was a scandal, but we have not had the right to know whether our pension fund was invested in a windfarm or cutting down a rainforest to plant a palm oil plantation.

I deeply regret that the Council did not match Parliament’s level of ambition and continued to insist that some of the sustainability risks and impacts of investments can be concealed from citizens. The inclusion of a regrettable comply and explain exemption means that companies can continue to choose to hide dirty and destructive investments, thus undermining the power of the sustainable finance agenda.

With thousands of climate demonstrators out on our streets, we call on our Parliamentary colleagues and Member States to listen to the will of the citizens, calling for a truly sustainable transition and to use our financial system to facilitate this.

Bill Etheridge, on behalf of the EFDD Group. – Mr President, as this actually now is my last speech, I’m going to dispense with the formality and say I think probably combining politics with finance is not a good idea. You knew I’d say that, so I’ll just get that done.

I want to say that it’s been a great honour for the last five years to represent the West Midlands, an area that I love, in this place. There’s been some good debates, there’s been people on all sides that I’ve grown to respect, and I hope that everybody goes forward from here and thrives and does well – all of your independent nation, individual nations, all of you as people, I wish you all greater freedom and I wish you all happiness.

And I want to take this moment if I may, just to say that it’s been a bumpy old ride for me particularly; I’ve found it difficult at times but I’ve been very lucky, I’ve had good friends, family and I most particularly want to embarrass by saying my Mum and Dad are still alive and with us and without their support – they’re my true heroes, and they’ve helped me through these years. It’s been wonderful, all the best to all of you, no matter what political shade you are. I wish you well.

President. – Mr Etheridge, I can only reciprocate and wish you all the best, but also to your parents, that they will be your heroes still for many years.

Federica Mogherini,Vice-President of the Commission / High Representative of the Union for Foreign Affairs and Security Policy. – Mr President, on behalf of the Commission, and in particular on behalf of Vice—President Dombrovskis whom I represent here, I would like to thank the rapporteur, Mr Tang, all of you for your comments and contributions today, and I am confident that the resolution will be adopted today, and I also share personally the fact that this would be a major step forward and a good way of achieving and accomplishing good results on this file.

This will pave the way for a swift entry into force of the legislative package, which represents a political priority for us. It is critical to mainstream disclosure on the impact that an investment can have on the environment and society. By adopting higher sustainability standards, we will increase the transparency, reliability and attractiveness of sustainable financial products. It will also help to raise market awareness on sustainability issues and foster innovation in investment strategies and the design of this financial product. So our belief is that this has the potential to bring a behavioural change in financial markets and in investors, promoting investments into a more sustainable economy, and I think this will be a very important step forward in our sustainability agenda. So thank you very much once again and I am looking forward to a positive vote later today.

Paul Tang, Rapporteur. – Mr President, let me start by saying that I am very glad that the Commission came forward with action plans for sustainable finance. I think that was a crucial change, led by Commissioner Dombrovskis, which I very much appreciate.

I’m happy to contribute, with others, on the first steps. Federica Mogherini is right: it’s not the last step, far from it. This also to Matt Carthy: yes, we need to work on this further. But I hope that these first steps, as Ms Sirpa Pietikäinen said, are a clear signal to the financial sector that change is coming: we are changing towards sustainable finance. This is a credible step towards that, and further steps will follow. That’s why I also now call on the Commission and the supervisors to keep on working on this file. I’m happy to work in the next Parliament and, if not, outside this Parliament on this change that we need.

Having been in this debate, I also learned that there’s a change underway in the European economy. We need to break away from the Anglo-Saxon—American tradition of ‘move fast and break things’, in which companies and financial institutions are just actors in an economy driven by monetary incentives. We need to return to the European tradition where we take into account companies, financial institutions and the board takes into account the interests of all stakeholders. We need to return to the European tradition where firms, companies, financial institutions, banks and insurers are part of our society and act accordingly. This is the change that we need, and I think it’s underway, because I can already see this change coming. I see front—runners. Maybe it’s because I’m a politician and I’m always an optimist, but I see good signs for this change. I think it’s very welcome to have this change to bring forward a fairer and more equal society.